|
Co-brand
Partnerships
| |
|
|
|
REALITY
CHECK UPDATE
Published Every Tuesday
and Friday |
| ARCHIVE:
APRIL
2000-MAY
2001 |
|
Contributed by
Mitch Harris
President: Market
Trend Realities,
Editor: The Reality Check
Newsletter |
|
July 31, 2001 |
| STOCKS |
| REALITY RATIO: +0.323
|
Last Signal: 06/29/01, TRADING BUY
Dow: 10,499.72 OTC: 2159.60
The Reality Ratio line moved higher again last week while
the Dow dropped by 159.98 points, the OTC Composite was flat and the
S&P 500 was up about 5 points. The broad markets have been doing
better than these major averages in relative terms, and this is the reason
the ratio has moved higher while the averages have not. We still see some
room for the bulls, but we must also point out that the current signal is
running its course and we need to be alert for the possibility of a trend
change in the not too distant future.
|
TUESDAY, July 31, 2001: The markets just haven t been able to get any traction lately, as fears over earnings, the economy, Argentina have weighed on the minds of investors, while traders appear to be taking an extended vacation this year. Overall, we continue to believe the market s underpinnings remain constructive enough to generate a trading rally in the weeks ahead, but we would feel a whole lot more comfortable if it would begin to manifest itself "above" the surface. Our office will be closed for the next few weeks and this will be the last update until Friday, 8/17.
Last week s successful test of the 10,203.69 low remains a reassuring factor that the next move of significance should be higher, but it seems to be doing everything possible to keep both, the bulls and bears frustrated and with no conviction. One fear that we think is holding back investors, is that consumers will soon lose their boldness to continue buying on credit while fears grow over job security and the ability to pay back debts. This morning s release of July consumer confidence will offer insight into whether consumers think they can continue spending enough to hold the economy up. A positive surprise would suggest the economy remains poised to recover while weakness would suggest that lower interest rates, the tax rebate and lower gas prices are not yet enough to offset the nation s personal spending, which remains higher than personal income.
The Dow has so far not been able to hold above initial resistance, near 10,400. A solid push above this would likely generate enough buying interest to begin the rally we still hope for. Higher resistance is between 10,600 and 10,679. A close above this would confirm the upturn and offer even higher projections, with further resistance at 10,800, 11,000, 11,180, and then at the more significant intermediate term barrier of 11,350. Critical short term support remains near this week s low at 10,203, down to last Wednesday s 10,120 low, 10,000, 9880, 9650, 9375 and at the 3/22, 9106 spike low.
|
|
TREASURIES
|
Treasury yields have remained firm in recent trading, as fears re-emerged over Argentina s hefty debt burden, even as their government just approved a plan that will (supposedly) lead to a balanced budget (more investor money vaporizing to money heaven perhaps?). We may have been just a bit pre-mature on what appeared last week to be an initial bearish reversal for bonds, but we continue to believe that the risks heavily lean toward only limited bullish potential. The yield reached a new low at 5.508%, and remains very close to what should be stiff Fibonnacci resistance near the 5.48% level. Even if the rally extends Itself further, we think it remains unlikely that it will push beyond the 5.40% bearish reversal point from late March
Below 5.48%, there is significant yield and Fib resistance between the 5.40% key level and 5.36% ( with the Fib. .786 resistance at 5.363%). A push above last week s 5.592% high would confirm a short term reversal, with next support near 5.80%, but for a bearish long term reversal, an upturn above the 5/15, 5.90% would ultimately confirm larger degree wave (3) of the bear market, making higher support at the 5.975-6.025% the next upside target for the bears. |
|
GOLD
|
| Gold & the XAU have made downside progress in recent trading, beginning with last weeks rollover of options that expired into longer dated contracts. This was followed by new hedge fund selling to re-establish new short sales. The XAU turned down yesterday, but remains within a relatively narrow range between 52 and 56 on our short term P&F Chart. While we think this will be resolved with a decline below 51, a push above 57 would now be a short term buy signal, and a good stop loss point for short term bearish traders. The trading indicators that we warned last Tuesday were "becoming extended and warn of a downturn," are now bearish and indicate lower prices in the short term. Short term support is at the 7/2, 51.30 low. A decline below this would warn of a deeper correction toward lower support levels, which starts at the key 2/14, 45.64 low, and then at the even more critical 7/14/00, 41.61 low. Higher resistance remains at the 5/18, 66.54 high. For (cash) gold itself, long term support near $254 remains vulnerable to the next challenge for the bears, with resistance beginning near $272.
| | |
|
PORTFOLIO CHANGES |
Tuesday, July
31, 2001: NONE TODAY
[Part of our offensive is to have a good defense! That means limiting losses and protecting gains]! |
Article contributed by Mitch Harris: President, Market Trend Realities & Editor,
The Reality Check Newsletter, and reprinted here with permission.
Market Trend Realities (MTR) is a Registered Investment Advisory which manages personal, corporate, Trust, and retirement accounts on a fee only basis. Several low cost, flexible management fee arrangements are available. Investment Advisor, Mitch Harris has studied the Point & Figure Charting Method under the direct supervision of Michael Burke, Editor of the prestigious Investors Intelligence research organization. Management is based on a unique combination of technical analysis methods and tools which include, The Point & Figure charting method, Elliott Wave Analysis & techniques, industry group analysis, cycle analysis, Relative Strength Analysis, Stochastics, and investor sentiment studies. MTR offers a very uniquely structured managed mutual fund program using the RYDEX family of mutual funds, which offer outperformance potential whether equity markets are rising OR falling! Inquiries are welcome by calling us at
(513) 421-8737,
Fax: (513) 421-8733 , or by email at: mtr@fuse.net .
MTR also publishes a monthly investment newsletter called "Reality Check", which offers technical commentary on the stock & bond markets, the Dollar Index, gold & gold stocks (XAU), Treasury yields, utilities, investor sentiment, and Federal Reserve policy. It also offers stock trading recommendations each month with price targets, stop loss points and insider activity. There are 4 trading portfolios, including a short selling account (we are very proud that our short sale recommendations have averaged 12.5% "compounded" during the roaring bull market of the last 5 years). Short term market commentaries are updated on Tuesday and Friday mornings, along with portfolio changes on this web page. They are also emailed for free to anyone who provides us with their email address. The regular subscription rate is $200 (US) per year. Samples are available upon request. MTR will be happy to send information on any of the above mentioned services. Please email us your home or business address along with your daytime phone number and specify your interest(s). |
|
|
|
